shedding $20,000 in debt

I am paying off my car today. It's exactly one year earlier than when it comes due, though I had still planned to pay it off sooner than this. But it reminded me of where we were a little over a year ago. Brian had $11,000 in credit card debt and we had three car loans with at least $9,000 across them. Now all we'll have is $8,200 in school loans and our two mortgages. The next thing to attack is the interest only balloon mortgage for 15% percent of our home's price. I pay a lot extra on it every month but have still only paid down $4,000 in principle in two years. The interest rate is 8.25% so we'd like to refinance if it becomes possible. Brian is talking about buying a truck and financing it, I am really hesitant to take on another loan. The book Total Money Makeover by David Ramsey was what inspired me to really get serious about paying things down.

Financial Prudence

Once important reason for the widespread nature of the present financial crisis is that insurance companies (e.g. AIG), banks, and investment banks were allowed to merge by act of Congress signed by President Clinton. This has mean that millions of people with insurance policies from AIG are left without insurance, or, in the case of personal disaster, without the ability to obtain it from a different company. All the banks were in on the toxic mortgage mess. When I discussed a loan with Suntrust Bank the loan officer was all too quick to suggest that I just include Lona's income with mine in applying for a personal loan. I refused to do so because that would be fraud. It is too bad that the heads of Fannie Mae and Freddie Mac were not so careful about misrepresentations of the trillion dollar magnitude.

Congress is also to blame for the present mortgage mess. They, mostly Democrats, put pressure on Freddie Mac and Fannie Mae to make sure the poor (often with poor credit) could get in on the housing boom. They got in on it all right. This is the origin of the toxic mortgages. Now we have two presidential candidates urging the country to take on the bad debts of many entities all merged and no longer properly financially isolated.

If we really want to make a mess of things just vote for a president of the same party as the Congressional majority.

Opposite of a locavore

One of my goals in starting this blog was to talk about finance. Archers Daniels Midland (ADM), the stock I bought last week gained 10% today. ADM is one of the largest producers of grain and processed foods and is the largest producer of ethanol which is now added as a stabilizer to all gasoline as a replacement for the recently banned MTBE. I have owned ADM before. In 2006 I bought about at about $31 and sold at about $42 to help with my house down payment. So around $23, this stock is a company with strong financials and market presence selling at a huge discount. It's a conservative and somewhat contrarian stock with a P/E around 8. Obviously it's up and down a lot right now but I think it will trade in the $40s again in less than two years. As soon as I get some more dough I'm going to set a limit to buy more next time it dips to $19-$20.